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Topic: Which of my two strategies is better? (Read 785 times)

Hello everyone. I need your advice. I am a US citizen, 34 years old, married, and live abroad in East Asia with my wife who is a native of my current country. Living abroad is fun but a huge hassle when trying to follow MMM advice because of the differences in laws and my status as US citizen/other country resident. I am trying to decide whether I should move back to the US or not and I want you to help me decide. Here are the facts:

My spending abroad, thanks to how cheap the cost of living is, is right at about $1,000 USD per month. I'll keep everything in US dollars to make it easy.

I can also save about $1200 per month. So I am saving over 50% of my income.

I do not have a Vanguard account because they don't allow you to open one if you are a non US resident. I'm wondering if I can open a joint account my with father, who lives in the United States.

Every time I transfer money to the United States, I'm losing money because of transfer fees. I could limit my transfers to one or two big ones per year. I might be able to work out a deal with my father where he puts in the amount I have saved each month on my behalf and I pay him back once or twice a year to clear what I owe him. (He has enough money to advance me this)

Big obstacle: I'm renting the place I stay in this country, the rent will go up a bit every few years, and because of the housing market in this country, it is actually cheaper to rent than to buy. Because of how cheap rent is and how tiny apartments are, and because of government corruption, real estate investment is not an option. No AirBnB, no buying a house and paying the mortgage with renters, etc. My wife would have to deal with all this and she has no head for business. For me the language barrier and legal-understanding barrier is too great to grapple with this stuff. Again, government corruptions means you can't bank on this, as any day they might say "Oh no you can't do that, pay up." (Americans have no idea how comparatively ethical business is in America to the rest of the world, which runs on bribes and uncertainty about what fees are coming down the pipe. Contracts are meaningless here.)

My goal, and this is important, is to be receiving $1,500~2,000 per month from investments. That is enough for me to retire in the country I want to retire in.

To recap:

Monthly spending: $1,000

Monthly saving: $1,200 minus transfer fees to the US

Problems: Vanguard difficult to get into, I'm a renter with no housing investment opportunities

Goal: $1,500~$2,000/month in income to retire on

Also: I have about $15,000 in savings and no debt at all.

If I move back to the United States, I will likely need to spend a year or two going back to school and lose $8-10k in savings to pay for school, which means not enough to open a Vanguard account (as I won't have 10k cash ready to start).

Also, this means I won't be working for a year or two. I have no idea how I would get health insurance. The plan would be:

1. get a job (I estimate I can make 35k starting out in the new career, so if my wife works even for minimum wage, we'll together have around 50k. Later my pay will increase as the average wage is 50k in that field)

2. buy a house, pay it off super quickly by renting all but one room to roommates. Hopefully I would be living for free or nearly free and paying it down lightning fast.

3. when the house is paid off, move abroad and live on less than the rental income, investing the rest. If the rental income isn't high enough, I could go back to working abroad except live off the rental income and invest my entire salary. I would use a property manager since I would be living abroad while renting the house. Eventually, when old, if my health declines, I would have a paid-off home to return to in America should I need to return for medical reasons, etc.

Other problems: returning to America entails the awful headache of helping my wife with immigration, getting health insurance, and dealing with more commuting (by "America" I mean where my family is, which is a good real estate market but means more commuting than where I live now).

A final problem. The country I live in now, though insanely corrupt, is extremely safe for women compared to the United States. To put it plainly, my wife is insanely hot and not used to paying attention to her safety. Her obvious lack of fluent English marks her as more vulnerable. Taking her to the US scares me. If anything happened to her I could not survive it either.

So am I better off staying in Asia or making the jump to America with the plan of building up wealth and then leaving again once I've got it (with a house to return to when I'm in the States)?

Can someone help me crunch the numbers? All sound advice is highly, highly, HIGHLY appreciated.

If the country you are in is as unstable as you say it is, it is probably better to invest in the US (we are choosing to invest in our home country rather than the country in which we reside). While Vanguard is not an option, are there options for non-residents? These may be taxable accounts, but at least you can pretty much guarantee that no one is going to come and take all your money just cuz they feel like it.

Another option is to invest in real estate in the US, especially if your father is able/willing to manage it for you, or to manage the property management company. We have also done this. We saved up the down payment and bought a condo in our home country and have rented it out. The rent covers the mortgage and all expenses. Family members manage it for us.

Opening an account with your father might be an option -- do you trust your father? In addition, how is his will structured? If something were to happen to him, this account is technically in his name and technically belongs to him. You need to make sure that he hasn't willed it to some other person. We've done something similar by setting up a company with my mom. We make loans to the company which then uses the loans to invest. We are paid interest on our loan.

With regard to transfer fees, if your father lives in a large city in the US, there are often private money exchange businesses that offer you a better rate and fewer fees. They earn the spread.

The other option which some of our friends here have used is to invest in their wife's name. So they set up investments in the Asian country and manage the investments, but use their wife's ID to do so, since their wife is a citizen while they are not. Your wife doesn't actually have to deal with any of this. She just has to show up and sign the necessary documents. Obviously, you would accompany her to all of these meetings. However, if you don't have a good understanding of how business/investment works in your country of residence, that may not be a great idea.

Re: housing. I would actually just continue renting if I were in your situation. Actually, I kind of am in your situation, and we have decided to just rent.

It's hard to crunch numbers because we don't know how much you'll be making/spending in the US. You need to look at your projected net savings in the US, and compare it to the USD$1200 per month you are currently saving.

In addition, does your wife want to move to the US? If her English is not great and she doesn't have a work visa, what will she do there? If you do decide to move, is she willing to put in the effort to develop her English skills? Will there be a community of peers for her to connect with where you live in the US? I had an acquaintance who brought his Asian wife to the middle of nowhere in Canada; she was extremely lonely and developed depression. She couldn't drive, didn't know much English, and was basically stuck in the house all day while he worked like crazy to support the both of them. There were also very few people in the community who could speak her language. I would say these non-financial considerations are just as important as the financial considerations.

I think being stymied by the brokerage has driven you down a very convoluted course. Just open an account with Schwab, who has no problem with this. A lot of non-US residents (i.e. not citizens, never been to US) invest in the US with them. And you can index just as cheaply as with Vanguard.

There is no need to add a co-owner to do this, either. While I'm sure you judge your father as honorable, he is also getting title to 1/2 the assets you are putting in. Again, an unnecessary complication.

As a further question, you say returning to the US. Do you have a US address? (I'm assuming it could be you father's?) Some place where you are registered to vote, or have a driver's license? I am an ex-pat, too, and will return to the US. In the meantime, I use my in-law's address as my US legal address, and do all my banking that way. The banks don't know and don't care about my international address. (note: Ireland does have a tax treaty with the US, which also makes the international aspect of my life moot for the banks--it does not drag them into foreign taxes or regulations. You should understand if the same is true for you.) You could also look at a number of mail-handling services who provide an address; there are several threads here discussing this.

As for money transfer, this can vary widely depending on what services are available for your country and currency. What service do you use? I use WorldFirst, and a number of people I know use OFX. Both offer zero fees and have decent exchange rates.

I have a relative who lives in a corrupt country in South Asia and married a woman there. Like your wife, she was beautiful, with little English, and she couldn’t cope in Australia - which I suspect might better than the US in these situations. They ended up in her country.

I have another relative who did the same, and his wife and family fitted into Australia. So it depends.

The second one was married for some years before they moved back, had several children in her country, and they came back to Australia when the kids started school. By this time, the family had visited Australia several times, and the wife had done a lot of English studies. The first couple came back without any extra English understanding, when she was younger, and before they started a family.

If you have school aged children, you are almost automatically part of the community.

I would suggest doing a little more research into the realities of both options. E.g., what is the current immigration process for spouses? How long does it take, how much does it cost, what is the chance she is denied, would approval even allow her to work to earn the money you anticipate her bringing in? $8-10K for a degree seems really cheap; have you priced out the degree you are looking at -- and what would you live on while going to school? If you can make $35K, what would your living expenses be in your target area (I guarantee it's not $1K/mo for an equivalent standard of living!). How much would that house you are thinking of cost, how long would it take to save the downpayment (and where are you going to stay in the interim/how much does that cost), what kind of rental income/occupancy rate would you actually get, what other expenses go along with having that kind of house, etc.

But most important: where do you want to live long-term? Do you want to stay put and continue your current work? Or all things being equal, would you want to move back to the US and/or change careers? FIRE is supposed to be a path to lead the life you want; you seem to be focused on how to change the life you want to get to FIRE faster. FIRE is awesome, but it is not enough on its own to make you happy. I'd rather work and live my own life than FIRE and live someone else's.

You seem to have a lot of different ideas, and all of them might work, but you don't have enough specifics about any of them to really assess their relative merits. I agree with reeshau: you seem to be scrambling around largely because the two ways you assumed people got rich (Vanguard and rental property) don't work in your existing situation. OK. That's not the only way people do it. Start by finding someplace to invest now, like Schwab, and start throwing as much money as you can at that account while you figure everything else out. That way, once you figure out what you actually want to do, you will have a nice 'stache to fund that effort.

I should just clarify that my wife's English is very good. I just meant that it will be obvious she's actually from Asia and not an American-born Asian. A lot of scammers hone in on for example Asian tourists because they're very nice and less able to report that they've been scammed, etc.

She would be able to work in the States and get along just fine. I only meant that I worry for her safety since America is inherently less safe.

The main lifestyle difference though is just switching surfing for camping and hunting. I guess I need to do more research.

But is saving $1,200 a month pathetically low and I need a much better job or is my savings rate workable?

You don't need to have access to Vanguard; as long as you can invest somehow in the country where you are, the principles outlined in the post apply. If you are saving over 50% of your income, and can keep your expenses at the same level as currently, then you can retire in less than 17 years without any pf the hassle of transferring funds to/from the US, handling estate issues on investments co-owned with your father, managing property at a distance, etc.

The main lifestyle difference though is just switching surfing for camping and hunting.

What does the above quote mean? Asking in case it gives insight re your overall case. Are you a professional surfer? A hobby surfer who plans to camp and hunt for recreation in the US?

You have a lot of separate concerns to sort out. With all due respect, this case is not mostly about numbers, it's about people and cultures, so there's not an automatic correct number procedure.

That said, you have asked for analysis of the investment numbers. I will assume $100 per month cost over the long term in doing currency conversions, etc while successfully investing in US-based mutual funds, a fairly safe option. Inherently this assumes you will succeed in using Schwab, and/or establishing an acceptable US mailing address. This will leave you spending 1100/mo and investing 1000/mo, a 50% savings rate. This would allow you to reach FI at the $1100/mo spend in about 17 years if that were your goal; see the tables in the article linked below.

You wisely have a higher target of $1500-2000 per month. I will use $2000 for caution's sake. There are several ways to calculate using this target. I will use the method of pretending your spending is 2000 and your investing is 1100 and then using the years-to-retirement table in the article above. 2000+1100=3100 income; 1100/3100 = about 35%; the table says you would need about 25 years to reach the $2000/month income level. If your current situation is sustainable for 25 years, I guess your current plan is feasible.

There are a lot factors involved - rising prices at home; changes in US law, which recently created your Vanguard hassle; the effects of age; etc. The American case doesn't have enough detail to compare it very well in my opinion because the numbers appear poorly researched and do not include key factors, such as the effect of wife's work, consideration of community of origin, and the value of contributing to Social Security (which makes a big difference at low to medium income levels if you return to the US). Keep researching, keep posting, and good luck.

PS. The wife safety thing shouldn't stop you, unless she and her family would consider any incident as an unforgivable breach and thus grounds for a lifetime of anger. Incidents can happen, but may not, and are at least likely to be rare. Learning to respond to them could be important, but is doable. I have a friend whose lovely Asian-American wife worked at a white collar job that nonetheless required nightly walks across deserted parking lots in sketchy areas. He insisted that she take martial arts classes, which she did for several years. Nothing ever happened to her but she felt better for having taken them. YMMV, but I would say this fear on both of your parts is a barrier that should be overcome rather than accepted.

Thank you BicycleB in particular for your thoughts. Very informative. I really appreciate you taking the time to lay it out for a newbie. It is tremendously appreciated. I've copied your post into EverNote to store with my other research. I appreciate your encouragement as well.

I am indeed still researching and crunching numbers. I had seen the Shockingly Simple Math post but it was months ago and I kind of forgot about it.

What I meant by lifestyle difference is that where I currently am, my hobby is surfing. In the States, I would switch back to camping and hunting. I always get lots of exercise outdoors, it will just change a bit. Both are good. Surfing can be annoying because there aren't waves everyday, whereas you can always go hiking/camping. And with surfing you have to deal with crowds, whereas hiking and hunting you don't. But surfing is a more intense workout that takes less time.

No matter where you go, just keep renting first, which gives you more options. Would your wife appreciate to share a house with several renters? Have you ever checked the rent vs. owning calculators. Sometimes renting can be financially smart.